Tech Groups Applaud Action Against China on Tech Materials

By Juliana Gruenwald

Tech groups applauded the United States' decision Tuesday to confront China over allegations that it is restricting access to rare earth and other materials used in many electronics including smart phones and televisions.

The U.S. Trade Representative has requested that China enter into talks through the World Trade Organization over allegations that it is unfairly limiting access to rare earth materials, tungsten and molybdenum by imposing export duties, export quotas and export pricing requirements. The European Union and Japan also have requested consultations with China on the issue.

"Now, if China would simply let the market work on its own, we'd have no objections," President Obama said Tuesday. "But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow."

Under WTO rules, China will have 60 days to try to resolve the issue through consultations with the United States. If those talks fail, the United States can request that the WTO launch a dispute settlement panel to examine the issue.

China is the largest supplier of rare earth materials as well as tungsten and molybdenum, which are used in a wide range of products including advanced electronics and batteries. "We've been trying to get China to change its policies on rare earth [materials] and stop rationing" them, TechAmerica Senior Vice President Trey Hodgkins told Tech Daily Dose. "We hope this ratcheting of discussions will change that."

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Hodgkins noted that the only U.S. supplier of such materials had shut down its mine but is now taking steps to resume operations because of the supply issues with China. Prices have risen sharply since 2010 when China began restricting its supply of the materials, according to the Consumer Electronics Association.

"If China wants to be a world player in trade, it needs to behave like one," CEA President and CEO Gary Shapiro said in a statement. "For far too long our member companies, particularly small companies manufacturing here in the United States have been bearing the cost burden of China's unfair practices. We welcome this move and the goal of diversifying the sources of these important minerals used in consumer electronics products."

USTR said China's policies are part of a pattern of behavior aimed at giving its manufacturers a big edge and also put pressure on foreign companies to move their operations to China.

Tech groups have long had concerns with some of China's trade policies, including a proposal that would have required foreign companies to share their technology in order to sell their products in China.

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